Media & Gaming - One Box to Rule Them All
A 5.1 surround sound system, DVD/Blu-ray player, receiver, Xbox, Wii, and PS3 are space hungry enough. Add all the associated remotes, cables, controllers, discs, and accessories, not to mention the required furniture, and you may have already occupied more than half of your new living room.
An Apple TV can stream, rent, and buy television, movie, and music content from Netflix and iTunes, stream video from your iPad, iPhone, or iPod touch, and even turn your TV into a screen for wireless gaming with these devices. With the massive library of games available on the App Store, simplicity of rentals on iTunes, and ever-expanding Netflix Watch Instantly catalog, this diminutive box can replace not only your DVD/Blu-ray player and your game consoles, but your bookshelf full of movie and game discs as well. An alternative to Apple TV is Roku, an excellent streaming box that supports even more content sources, including Hulu Plus, Amazon Instant Video, Pandora, and Rdio.
Smart TV - Not So Smart
If you're in the market for a new TV, you may be tempted to simplify further by going for one with video services built-in, but I recommend focusing on slim build and screen quality instead. The user interfaces in these "smart" TVs are often not only complex and sluggish, but in many cases poorly maintained by the manufacturer. LG and Samsung deserve praise for their hardware quality and design, not their software experiences. A slim, beautiful screen paired with an inexpensive, elegant media box like Apple TV or Roku is the way to go, despite the extra peripheral.
To replace your speaker system and receiver and avoid complex, unattractive wiring, consider a sound bar and wireless subwoofer. We've written about these simple, low cost sound solutions in the past (see some of our favorites here and here). While not as robust as full sound systems, many of them provide surprisingly rich sound, and you can't beat their size and simplicity.
The best part about these solutions is that they can be easily paid for by reselling your old gear. Host a yard sale, trade in your media to Amazon, sell your electronics to Gazelle, or assemble an epic Craigslist post, then use the earnings to buy your new, simpler setup!